What Americans Have Spent So Far This Year In Commissions:

Poor marketing attracts one type of buyer the most: predatory investors. We mentioned in an article on common home showing mistakes some of the negative effects of the timeless showing mistakes sellers can’t seem to stop making. But those house marketing mistakes can have even further reaching effects.

Consider the investor (Know your enemy)

Investors and primary home buyers alike often see For Sale By Owner (FSBO) homes as potential steals. Let me tell you more about that mindset so you can protect yourself. When I walk through a FSBO house as an investor, I see opportunity for getting a deal. When your untrained dog jumps on me and leaves me covered in dirt and saliva, I smile. I know that Spot is doing the same thing to all the other possible buyers.

Common seller showing mistakes have this effect as well. When you gab about your home, the investor pays close attention. You are, of course, required to disclose any problems and traditionally, buyers have a right to home inspected. But your level of detail in going over your home’s history, discussing the in’s and out’s, nooks and crannies, really only gives me more ammo at point of negotiation.

You’ve now given me, the investor, reasons to make a lower offer and chip away at your resolve for the next six months knowing that you are not optimized in your marketing.

Let’s dig a little deeper. When a FSBO points out a home upgrade they’ve made as a selling point, I inspect the quality of the (often) shoddy work done by the “Will work for $5 an hour” sign holding laborer outside the Home Depot or just as likely in the case of you selling your home FSBO, you did the work yourself with a trip to Lowe’s and a YouTube video tutorial.

At the end of the day, your level of detail pointing out the good, the bad, and the ugly, hurts you and helps the investor in two key ways.  It helps me understand you and her perception of the house and I can use that when we negotiate on price. In one way, I get to make mental notes of problems based on my high and stringent standards. Secondly, it gives me opportunities to correct you, to turn something you see as a lovely part of your home into a negative.

The solution (your best defense)

While investors are looking for a deal, calculating and removed from the outcome in negotiations with you, they may be playing the same game on 20 to 100 other properties. In contrast, buyers looking to move are more subject to emotions in their selection process, just like you are in the selling process.

This might all sound obvious but the effects are not. Real estate speculators’ ability to play on seller insecurity and emotion is something you need to be consciously aware of in the moment and at all times. Investor sharks are very good at what they do. Your best bet is to avoid them, ignore their tactics, and keep them in mind only as a last resort.

In this market, it’s extremely common for sellers to go six months without an offer. When that time comes, you want to make good decisions with a clear head. If you are just getting started selling, avoid the cut-throat investor types. Appeal to buyer emotions and sensitivity, because that’s where you have control. Protecting yourself from the potential harmful effects of an emotional marathon or roller coaster in a tough housing market is more important than you can know.

Side note: I just read this NY Times article on decision-making, reminded me of what I was starting to get at in the end of this article. It’s a bit long but it starts providing very useful information a couple pages in on the psychology behind decision making.  

 

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Comments

  1. it is not possible to coleclt a commission if you are the principle is incorrect. They may want to check their source. I am an active real estate agent. I have bought 2 homes that were my primary residence in the last 7 years. Each time I represented myself as the buyer’s real estate agent. Each time I deducted my commission from the price of the home because that is how I wanted to get paid. But I had the option to get paid the normal 3% as the buyer’s agent and have that money go through my broker and their commission split to be taken out. So in order to avoid all that, most brokers allow their agents to have at least 1 personal transaction in order to benefit from it. Maybe things are different in NY I am a TX agent. I say get your license but don’t be a broker (more expense and liability) just be an agent. Find a broker that will just charge a minimal desk fee ($250) per month or a certain amount per transaction ($200) and they also will pay your E O insurance. As long as you keep your license active, this will be a great asset to have in the future as you and your family or friends buy homes. It will save you money in buying and selling. Just make sure that everyone involved in the transaction knows you are a licensed agent and representing yourself.Good luck.

    • Depending on that state that you live in there are different prcctiaes on what type of contract you sign. The most common is an exclusive contract where the realtor has the only right to represent you. It protects both you and the realtor. For the realtor, it protects them in that when they show you a house you don’t run to another agent after they have done all the work. If the agent is a Realtor (realtor.com) then they have to obide by the oath they take when becoming a member. The contract is not required but again common practice will dictate what is done in your state. You can also check with non full service agents such as Assist-to-Sell or Help-U-Sell. Using them can save thousands on the commissions paid to realtors.

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